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Evangel College
2010/2011 Term 3
Economics – S.5 Summer Revision 06
Name:_____________________________(
)
`Class:S.5 _______
Part 8 Price Elasticity of Demand and Supply
1. Which of the following would increase the elasticity of demand of the transport service of the Mass
Transit Railway (MTR)? [2003]
A. the cutting of bus lines running routes similar to those of the MTR
B. a decrease in MTR passenger fares
C. the opening of new lines of the Kowloon-Canton Railway running routes similar to those
of the MTR
D. a decrease in the operating costs of the MTR
2.
The demand elasticity of good X is 1.2. After a decrease in supply, the equilibrium quantity drops by
30%. The equilibrium price would _______ by ________. [2000]
A. Increase…25%
C. Increase…36%
3.
B. Decrease…25%
D. Decrease…36%
After a good harvest, the price of choi-sum has changed by 50% and the quantity transacted has changed
by 40%. Which of the following statements is/are correct? [2002]
(1) The quantity demanded of choi-sum has increased.
(2) The demand for choi-sum has increased.
(3) The total revenue from selling choi-sum has increased.
A. (1) only
B. (1) and (2) only
C. (2) and (3) only
D. (1), (2) and (3)
4.
If there is a poor harvest of rice in Thailand, the total expenditure on Thai rice in Hong Kong [1997]
A. would increase because of a price rise.
B. would decrease because of the availability of substitutes.
C. would be more or less the same because of the availability of substitutes.
D. may increase or decrease, depending on the price elasticity of demand of Thai rice.
5.
In a period of rainy weather, the price of umbrellas increased by 10% while the quantity transacted
increased by 15% What is the price elasticity of demand/supply of umbrellas in the above situation?
[1993]
A. The demand is elastic
B. The demand is inelastic
C. The supply is elastic
D. The supply is inelastic
6.
The elasticity of demand is unitary over the price range from [1991]
A. $ 2 to $ 6
B. $ 2 to $ 8
C. $ 4 to $ 8
D. $ 4 to $ 10
7.
Suppose there is a good harvest of apples this year. Under which of the following conditions will apple
growers earn more income? [1990]
A. They sell more apples.
B. The demand for apples is elastic.
C. The supply of apples is inelastic.
D. The government fixes a minimum price on apples.
8.
The Western Harbour Crossing (俗稱西隧) has no traffic congestion problem. In July 2004, its tolls
increased (except for taxis). With the aid of a diagram, explain under what condition an increase in the
toll would increase the sales revenue of the tunnel company. (6 marks) [2005]
Answer:
9.
Deflation has occurred in Hong Kong since 1998.
A government official has said, 'Deflation in Hong Kong would stimulate its exports.'
With the aid of a diagram, explain under what condition would deflation increase Hong Kong's total
export value (in terms of the Hong Kong dollar). (7 marks) [2003]
Answer:
10. Suppose the postage charge of a country is fixed. When e-commerce and e-mail becomes popular, the
revenue of the country’s Post Office from the postage charge falls sharply.
(a) Indicate in a diagram the decrease in the postage charge revenue of the Post Office.
(b) In order to compensate for the decrease in revenue, the Post Office increases its postage charge. Indicate
in the diagram in (a) the change in revenue of the Post Office due to the increase in postage charge. (5
marks) [2001]
Answer:
11. Suppose a typhoon destroys a large quantity of vegetables of Country A. However, the total revenue from
the sale of vegetables increases. With the aid of a diagram, explain this phenomenon in terms of the price
elasticity of demand.(7 marks) [1994]
Answer: